Although “Record Levels of Edtech Funding” has been a recurring headline, there hasn’t been a focus on the role of philanthropy as the majority of funding is coming from the private sector. From our front line view as an active edtech seed investor, we see the need for diverse forms of capital to realize the full potential of technology to differentiate instruction and drive improved learning outcomes. With their long view of the market and a focus on student achievement, foundations are uniquely positioned to fill existing gaps in edtech funding. For example, additional sources of capital are needed to provide high quality technology tools for students with specialized needs and underserved backgrounds. So what is preventing foundations from funding edtech? How much money have foundations recently contributed to edtech? Which foundations are leading the way and what innovative approaches are they taking? Find out in Philanthropy’s Essential Role in K-12 Edtech and Strategies for Impact, an analysis of the current state of major foundations and K-12 edtech funding. We hope foundations will use this research to find ways to support the K-12 edtech ecosystem given their mission and capacity. Thank you to collaborators Dan Runcie, Vivian Wu, and Chian Gong. Thanks also to Diana Barthauer for support with graphic design.

1. Philanthropy's Essential role in
K-12 Edtech & Strategies for Impact
October 2014

2. Technology is
Technology is enabling the
shift from one-size-fits-all to individualized instruction
Technology helps teachers do more by creating
new learning environments that leverage teacher talent
of teachers agree that technology use in the
classroom can enhance student learning
Sources: http://gettingsmart.com/wp-content/uploads/2012/12/Digital-Learning-Deeper-Learning-Full-White-Paper.pdf
and BrightBytes Survey

3. Majority of Edtech Funding is from
Traditional Investors, but gaps exist
Private capital accounts for of K-12
edtech funding. It is concentrated at the early stages.
Funding gaps exist at the later stages, within
specialized markets, and for school solutions.
Source: h"p://www.newschools.org/blog/closer-­‐look-­‐2013

4. Philanthropic capital is needed to
realize the full potential of edtech
Traditional investors are unlikely to provide
sufficient funding for high quality tools for
Special needs and underserved students.
With their focus on impact and long view of
the market, foundations are uniquely
positioned to fill edtech funding gaps.

5. Executive Summary
of K-12 edtech ?
How can Foundations increase Their Support
• Limited expertise in for-profit investing
• Belief that VCs are better equipped
• Preference to fund non-profit orgs.
• Restrictions and challenges with
investing vehicles
• Lack of alignment with mission/strategy
• Invest through intermediaries
• Target underfunded areas
• Conduct RFPs/Challenges
• Fund research and efficacy studies
• Develop an accelerator partnership
• Fund districts for specific edtech usage

6. AGENDA
Funding landscape
of foundations and K-12
edtech since 2013
Barriers
to foundations funding
edtech
Next Steps
for foundations interested in
edtech
Potential Solutions
to address edtech funding
barriers

7. Majority of Foundation edtech funding has been
to Non-Profits and in the form of grants
51% of investments are in Non-profits
80% of invested dollars are in the form of grants
Source: Publicly available data from grants databases of various foundations: http://bit.ly/1s2hsD1
Note: Does not include LP positions in for-profit edtech funds
1. Funding Landscape

8. Largest category of Foundation edtech funding
is School Operations
$5M
$0.5 M
$4M
1. Funding Landscape
$8M
$21M
$4M
$1M
$6M
Curriculum Products
Teacher Needs
School Operations
Sites and Resources
Resource Discovery, Curation
& Lesson Planning
Games
College and Career
Intermediary
Source: Publicly available data from grants databases of various foundations: http://bit.ly/1s2hsD1
Note: Intermediary category does not include LP positions in for-profit edtech funds
Categories based on EdSurge Index- https://www.edsurge.com/products/

9. Foundations Have Varying levels of interest and
activity in funding K-12 edtech
Trailblazers
Enthusiasts
Up-And-Comers
Thinkers
No Interest**
My foundation is an active investor in
K-12 edtech and it’s part of our
strategy
4+
2-3
1-2
0
0
I am interested in K-12 edtech and am
finding ways to align it with my
foundation’s overall strategy
My foundation has made a few one-off
investments in K-12 edtech, but it
is not core to our strategy
I have heard that other foundations
invest in K-12 edtech, but I do not
know where to start
I am interested in supporting
education, but not K-12 edtech
*Since 2013
**Foundations with “No interest” were not included in this research
1. Funding Landscape

10. 1. Funding Landscape

11. Trailblazers & Enthusiasts have Funded edtech
through a variety of channels
Grant
Request for
Proposal
Mission
Related
Investment
Program
Related
Investment
Research/
Efficacy Study
Limited
Partner
Investment
Bill and Melinda
Gates Foundation
˜
˜
˜
˜
˜
˜
Michael and Susan
Dell Foundation
˜
˜
ECMC Foundation
˜
˜
˜
Joyce Foundation
˜
˜
W.K. Kellogg
Foundation
˜
˜
˜
1. Funding Landscape

12. AGENDA
Funding landscape
of foundations and K-12
edtech since 2013
Barriers
to foundations funding
edtech
Next Steps
for foundations interested in
edtech
Potential Solutions
to address edtech funding
barriers

13. We asked Foundations what
prevents them from funding
edtech and this is what we
2. Barriers
heard…

14. Limited expertise in for-profit
investing
Foundations want scalable and
sustainable solutions [in edtech], but have
a lack of knowledge on how to do it.
2. Barriers

15. Belief that traditional investors are
better equipped
VCs start out with much more money dedicated to this area, so
it doesn’t make sense for foundations to give small
amounts and ask companies to pitch them.
2. Barriers
What impact can a foundation have on such
a large market with relatively small
philanthropic investments?

16. Preference to fund non-profit
organizations
Markets direct for-profit edtech companies
away from their focus on impact.
Foundations don’t want to be perceived as
making returns off of schools/teachers/
students.
2. Barriers

17. Restrictions And Challenges with
investing vehicles
Studies show that organizations are more
successful when they receive general operating
support, but grants are restricted for a
particular purpose.
A PRI IS a hassle and requires that a foundation bring in lawyers.
2. Barriers

18. Lack of mission & Strategy Alignment
Many edtech investments help
the education sector at-large, but
few investments are
targeted at a foundation’s
specific region and/or
populations.
2. Barriers

19. AGENDA
Funding landscape
of foundations and K-12
edtech since 2013
Barriers
to foundations funding
edtech
Next Steps
for foundations interested in
edtech
Potential Solutions
to address edtech funding
barriers

20. Investing through intermediaries allows
foundations to learn how to invest in edtech
Can leverage existing expertise
Can “sit at the table” and learn the
investing process
1- Nellie Mae is an LP in Rethink Education
2- ECMC is an LP in New Markets Venture Partners and Rethink Education
3- MSDF, Gates Foundation, Sobrato Family Foundation, and J.A. and
Kathryn Albertson Foundation have funded the NewSchools Seed Fund
3. solutions
Not building in-house capacity
Investments not as tightly aligned to
strategy and metrics

21. Targeting underfunded areas addresses needs
unlikely to be met by traditional investors
Less overlap with VCs as special
populations written off as too niche
Opportunity to focus edtech on
specific populations and go deeper
Can signal market opportunities
1- Michael and Susan Dell Foundation gave a grant to Ellevation to adapt
their English Language Learner product for Texas standards/regulatory processes
2- Stuart Foundation gave a grant to Goalbook to improve the educational
opportunities for students in foster care
3. solutions
Overcapitalization early on could
lead to unsustainable business
models

22. Conducting RFPs/challenges is a great way to
Identify and select Mission Aligned solutions
Defined goal of intended impact
Selection
of
best
solutions
Surface
unknown
opportunities
1- Gates Foundation launched the Literacy Courseware Challenge for the
creation and development of web-based literacy courseware
2- Robin Hood Foundation launched the College Success Challenge to fund
the development of solutions to address remedial graduation rates
3. solutions
Limited
only
to
applicants
Could force early stage startups to
expend all resources on the challenge
Requires
expertise
in
crafting
challenges and capacity to run them

23. Funding Research and efficacy studies provides
objective metrics and benefits the entire sector
Studies benefit entire field
Can align study to mission and
strategy
Noyce Foundation funded a controlled experiment to determine if Motion Math
improves a child’s fractions knowledge and attitudes
3. solutions
Unintended
results
from
study
Requires different methods like
Developmental Evaluation
May not have applicability/scalability
to other regions or populations

24. Developing Accelerator partnerships leverages
expertise and builds edtech network
Selection of best applicants
Partners typically complementary
1- Zynga.org partnered with NewSchools to launch Co.lab, an accelerator for
startups using the power of games to transform education
2- Foundations have supported edtech accelerators like Imagine K-12,
LearnLaunchX, 4.0 Schools and Kaplan TechStars
3. solutions
Risk of brand image with partnership
Cost of physical space/resources
Needs to be targeted or may not
provide enough value to startups

25. Funding districts for specific edtech usage
allows for targeted impact in A region
Can fund a targeted region or district
of interest
Can influence districts to improve
procurement processes
More tangible student outcomes
J.A. and Kathryn Albertson Foundation funded a statewide pilot of Khan
Academy in Idaho
3. solutions
Only expands existing edtech vs.
driving new innovation
Can
distort demand and alter edtech
product design
May not be sustainable since funding
has to be renewed

26. AGENDA
Funding landscape
of foundations and K-12
edtech since 2013
Barriers
to foundations funding
edtech
Next Steps
for foundations interested in
edtech
Potential Solutions
to address edtech funding
barriers

27. Foundations at all interest levels can take
steps to accelerate edtech innovation
1 - Identify barriers specific to your foundation and determine solutions which are
most suitable given your mission and capacity
2 - Build knowledge of impact investing vehicles: PRI, MRI, Expenditure Responsibility
http://www.forbes.com/sites/ashoka/2013/02/21/why-program-related-investments-are-not-risky-business/
http://www.nafoa.org/pdf/Mission-Related-Investing.pdf
http://www.irs.gov/Charities-&-Non-Profits/Private-Foundations/Grants-by-Private-Foundations:-Expenditure-Responsibility
3 - Work with other funders to develop investment frameworks for broader
publication/implementation: Mission Investors Exchange- https://www.missioninvestors.org/
4 - Stay on top of trends in edtech:
https://www.edsurge.com/
http://www.edtechmagazine.com/k12/article/2013/06/2013-honor-roll-edtechs-must-read-k-12-it-blogs
http://patricklowenthal.com/2013/11/educational-technology-related-education-conferences/
5 - SIGN UP to learn more and connect with foundations interested in funding edtech:
https://docs.google.com/forms/d/1481dz_5DsJM0aaZISqW8ceAHXhVx4vqYOnVfNqd6HNE/viewform?usp=send_form
4. Next Steps

28. Recent Articles
How Foundations Can Engage the Startup Community to Accelerate Impact-https://
www.facebook.com/1776dc/posts/343575895796196
Boosting Impact: Why Foundations Should Invest in Education Venture
Funds- http://cdno.gettingsmart.com/wp-content/uploads/2014/03/Boosting-Impact-Final.pdf
A Tale of Different Deals: Diving into Early Stage Edtech Investments-https://
www.edsurge.com/n/2014-05-05-a-tale-of-different-deals-diving-into-early-stage-edtech-investments
The Re-Emerging Art of Funding Innovation-http://
www.ssireview.org/articles/entry/the_re_emerging_art_of_funding_innovation
4. Next Steps

29. Thank you to the following leaders who took
the time to make this research possible
Bill & Melinda Gates Foundation: Kai Kung, Stacey Childress
Michael & Susan Dell Foundation: Micah Sagebiel
The Joyce Foundation: Matt Muench
Nellie Mae Education Foundation: Nick Donahue
ECMC Foundation: Josh Susser
V3 Consulting: Victor Vuchic

30. Appendix
Foundation Snapshots

31. The Gates Foundation has led the field in
approaches to edtech funding
Interview Insights:
RFPs are an investment vehicle for the impact that a foundation wants to
see and create.
PRIs and MRIs are often misunderstood in the foundation field.
New Venture Fund
$12.6M grant
Pacific Charter
School
Development
$4M grant
Summit Public
Schools
$500k grant
Appendix
BloomBoard
$3M PRI
BrightBytes
$330k RFP grant
LearnZillion
$1.7M grant

32. MSDF has made several edtech grants and
made its first PRI in 2011
Interview Insights:
One area of focus is on promising Series A companies that might use a PRI to attract
traditional investors. MSDF seeks opportunities to serve as a market signal for quality
of potential student outcomes and strong business opportunity.
As MSDF launched its U.S. PRI use in 2011, it decided not to build out a dedicated PRI
team, but to integrate the practice into existing program officers’ tool kit.
Urban Teacher
Center
$1M grant
Philadelphia School
Partnership
$4.5M grant
Digital Promise
$300k grant
Appendix
NewSchools
Venture Seed Fund
$3M grant
Schoolzilla
$250k grant
Mastery Connect
$1.5M Series A- PRI
$1M Series A1- PRI

33. ECMC has made edtech investments through the endowment
to support its mission and generate return
Interview Insights:
Intermediaries are a good way to invest endowment dollars.
PRIs can be used to invest at earlier stages (seed) and MRIs used for later stages.
California Student
Aid Commission
$98M grant
Appendix
Rethink Education
LP position
New Markets
Venture Partners
LP position
Quad Learning
Series B

34. The Joyce Foundation has funded a few edtech
companies and is developing an overall strategy
Interview Insights:
It’s unclear whether PRIs can be an efficient investment vehicle if you’re not building a
full portfolio.
Absent an approach to direct investing in companies providing products/services,
supporting the ecosystem through funding research and infrastructure organizations
(like Digital Promise) can have broad impact.
Intermediaries and traditional investors are better equipped to do diligence than
building that capacity in-house.
WestEd
$1.2M grant
Advance Illinois
$1M grant
Appendix
EdSurge
$165k research
grant
SRI
$1.1M efficacy
study

35. Nellie Mae Education Foundation’s Approach is to
invest as an LP in education venture funds
Interview Insights:
When investing as an LP in an education fund, there may be more risk
on profit, but there is better alignment with the foundation’s mission.
Department of
Education
$230k grant
Appendix
Rethink Education
LP Position